I am hoping to get some feedback about my portfolio. I believe I've put it in the appropriate format but let me know if something is missing or looks incorrect. I have been consistent at saving and investing but would not consider myself highly knowledgeable. I've read some of the Boglehead books, postings, etc but be gentle

2.8% cash for investing 25.4 % stock in 38 companies, some since early 1980’s; capital gain ~half of value; last yield of 2.39%; mostly buy and hold; recently moved account to Vanguard; currently not managed1.8% in municipal bonds

New annual Contributions $20,400 into 403b per year with 25% as TIAA traditional, 15% TIAA Real Estate, 60% CREF Stock

Questions: 1. Am I too heavily in equities? How best to modify?2. What is best way to harvest my high equity individual stocks? Stock purchases back in 1980’s have appreciated beautifully but will have substantial capital gains tax when sell. I realize best if I wait until retire when income lower but any more advice than that?3. Look like reasonable allocation if I hope to retire in 3-5 years? This would be pre-social security but have moderate expenses and no debt; spouse shares living expenses but I can’t count on assistance financially

Thanks for any advice or education...

Last edited by BlueBike2011 on Thu Feb 07, 2013 7:38 am, edited 1 time in total.

I would suggest editing the thread title to add something like "TIAA" or "TIAA-CREF" or even "T-C". This should attract posters with experience and knowledge regarding TIAA Traditional and/or TIAA Real Estate. I am led to believe they are fairly special or unique or something like that. You'll want to know how to best take advantage of them.

I provided the symbols & expense ratios (in parenthesis) for accounts except TIAA CREF. I can look up the expenses ratios but as far as ticker symbols, I read this: "There are no ticker symbols associated with the CREF accounts because they are not publicly traded." Pingo, thanks for suggestion to change thread title. I agree that I'm too heavily in stock funds and individual stocks. need advice on changing that distribution.

My apologies for not being clear. I was also recommending that you edit the title of your thread from "Trying to learn-- near retirement [Portfolio Help]" to something like "Portfolio Help: Near Retirement (TIAA CREF)". I'm not good with eye-catching titles, but feel free to appropriate my example if it looks appropriate.

There's a special crowd of posters can can offer insight into using TIAA CREF's unique offerings to your advantage.

Edit: Come to think of it, perhaps the following thread will give you some helpful information while we wait for the big guns to arrive.

I'm trying to understand your portfolio and I'm a bit confused by what your accounts are. My #1 recommendation would be to consolidate your funds. You have many many duplicated slices and I think you could make managing and understanding your portfolio much easier if you omitted these many slices.

But before I could even do that, I'd need to understand what accounts you have.

1. Are the four holdings in "Vanguard mutual fund accts" all taxable accounts as well?

2. Are you open to transferring your small SEP IRA into your TIAA-CREF 403(b)? It's such a small account, you might as well if you are able to and it would make your account management a little bit easier. I think this type of transfer is legal (as long as both are pre-tax contributions) but you'd have to check to see if your 403(b) permits it.

3. "Cash match with employer" -- I don't understand this. Is this 0.5% in your 403(b)? Are you allowed to choose how to allocate it? Can this 0.5% be mingled with what's in your 403(b)?

4. "Optional retirement account through TIAA CREF" - what type of account is this? Is this part of your 403(b)? Can you mingle these holdings with what's in your 403(b)? Is this a tax-advantaged account or a taxable account? What I'm trying to understand is whether the money within "403(b)" and "Cash match with employer" and "Optional retirement account" can be intermingled or not, as well as what kind of tax-treatment is "Optional retirement account"

Other questions:

5. Are you eligible for a pension on top of Social Security and your retirement savings?

6. Can you list the available funds in your 403(b) and what their expense ratios are?

As for the stocks, there are many similar threads out there with people holding stocks with appreciated shares who are now contemplating a more Boglehead type of portfolio. I don't think I have much to add to these threads. Some typical recommendations:

If you make charitable donations, do so with appreciated shares of the stocks.

Don't reinvest the dividends

If you do sell, do so gradually with an eye to minimizing taxes (I know, not very profound...)

FWIW, if you have chosen 38 stocks well, and they are diversified across industry/sector, then you're in much better shape than many of the case studies we see here where someone has just 2 or 3 or even up to 10 stocks. I don't remember the exact numbers, but I've read that having just 30 well-chosen stocks (or is it 50?) is almost as diversified as you need to be to diversify away unsystemic risk. While few people here would go out and advise a newbie to buy 38 stocks, if you already have these stocks for 30+ years...

Hoppy08520, I agree that I have too many accounts. a bit confused on how to consolidate. believe some cannot be done until I turn 59/60 but could be wrong. The history is that I've consistently contributed to 403B at my work . originally I followed advisors who recommended Lord Abbett, Calvert, and later American Funds. A few years ago the institution limited 403b contributions to just two companies: TIAA-CREF, Fidelity. I began putting my new contributions into TIAA-CREF for the 403B. Maybe I can move some of the Lord Abbett and American Funds into TIAA-CREF funds but I know I cannot yet move into some other until I am older and can roll over. Here are specific answers to the questions you posed:

1. yes, the four holdings in "Vanguard mutual fund accts" are taxable; were made with after tax contributions and I pay taxes on dividends and gains if sell.

2. I am open to transferring the small SEP into TIAA-CREF and can look into this.

3. My employer does a small incentive to encourage folks to contribute towards their retirement. employee contributions of $40 per pay period are matched with $20 from employer into qualified 403B plan. so can't make more contributions to this than already do. my statement from TIAA-CREF lists this as a separate account.

4 & 5. The "optional retirement plan" is more or less my "pension". The employer (educational institution) offered state retirement plan (defined benefit) or TIAA-CREF optional retirement system (defined contribution). I chose the latter for portability reasons. So, I get a choice of what to invest the money that the employer puts into this account. I have gone along with the advice of the TIAA-CREF advisor that I met with but don't claim to have a good handle on all the choices they recommended.

7. yes, the stock account has done well and is diversified. I had an advisor suggest the purchases and paid a transaction fee for each trade. I mostly bought and held with little turnover. I pulled the account and moved to Vanguard when the advising company implemented substantial fee as percentage of holding regardless of trading. It has just been sitting for last year as I decide what to do with it. Know now I can whittle at it by selling off any losses to balance gains.

BlueBike2011 wrote:Hoppy08520, I agree that I have too many accounts. a bit confused on how to consolidate. believe some cannot be done until I turn 59/60 but could be wrong.

Hello BlueBike2011, I just want to clarify a couple of terms: account and fund and make sure we don't mix them up.

Account: where the money is held (custodian), who the owner(s) of the account are (single individual, joint, etc.), and its tax status (taxable, pre-tax, post-tax, etc.). Generally but not universally, it's advisable to hold as few accounts as you can, and to consolidate accounts that can be consolidated. The benefit of consolidating is that it can be easier to manage your accounts, you can qualify for funds that have minimum amounts to hold, and you can qualify for cheaper share classes.

What tends to happen over a lifetime is you wind up with a number of different accounts, and sometimes there's only so much consolidating you can do. For example, you might have a 401(k), 403(b), Traditional IRA, Roth IRA, inherited IRA, inherited Roth IRA, taxable accounts, etc. There's not much you can do to consolidate accounts that are in different tax status, e.g. a pre-tax Traditional IRA and a Roth IRA are just different and you have to manage these separately.

Fund: These are the various mutual funds or ETFs that you have in your accounts. In many cases, it's also generally advantageous to consolidate these into just the holdings you want/need, for the same reasons you want to consolidate your accounts.

You can move money from one fund to another fund within the same account, but you can't move money from one account to another (unless those accounts are of the same type, e.g. you have two Roth IRA accounts at two different custodians. If you do transfer, you have to be very careful that you do so correctly so you don't unwittingly trigger a taxable event.)

The reason I bring all this up is I was trying to determine if some of your accounts are truly separated accounts, in which you can't mingle the money from one account to the next, or if this was some mental categorization you were doing.

BlueBike2011 wrote:The history is that I've consistently contributed to 403B at my work . originally I followed advisors who recommended Lord Abbett, Calvert, and later American Funds. A few years ago the institution limited 403b contributions to just two companies: TIAA-CREF, Fidelity. I began putting my new contributions into TIAA-CREF for the 403B. Maybe I can move some of the Lord Abbett and American Funds into TIAA-CREF funds but I know I cannot yet move into some other until I am older and can roll over.

I'm still a little confused. To recommend to you a Boglehead-style portfolio, I would advise exchanging out of these seven actively managed funds into lower-expense index funds in your 403(b):

I'm not sure if you are not allowed to add to these, or if you're not allowed to get out of these...or both.

Can you find out for sure how much (if any) of your money is locked into these seven funds above? If you are stuck in these funds, then we'll work around that. I don't know your plan, but it seems hard to believe that you couldn't transfer your money out of these funds into other Fidelity or TIAA-CREF funds in the same 403(b). I could understand if they left some of these funds around for legacy holders, but prohibited new money from coming into them.

BlueBike2011 wrote:1. yes, the four holdings in "Vanguard mutual fund accts" are taxable; were made with after tax contributions and I pay taxes on dividends and gains if sell.

Understand, makes sense.

BlueBike2011 wrote:2. I am open to transferring the small SEP into TIAA-CREF and can look into this.

Good, at just half a percent of your portfolio, it's not a big deal either way, but you might as well trim one little account.

BlueBike2011 wrote:3. My employer does a small incentive to encourage folks to contribute towards their retirement. employee contributions of $40 per pay period are matched with $20 from employer into qualified 403B plan. so can't make more contributions to this than already do. my statement from TIAA-CREF lists this as a separate account.

Got it, makes sense. I was trying to see if that holding could be merged in with others, but sounds like it can't and that it needs to be managed as an independent account.

BlueBike2011 wrote:4 & 5. The "optional retirement plan" is more or less my "pension". The employer (educational institution) offered state retirement plan (defined benefit) or TIAA-CREF optional retirement system (defined contribution). I chose the latter for portability reasons. So, I get a choice of what to invest the money that the employer puts into this account. I have gone along with the advice of the TIAA-CREF advisor that I met with but don't claim to have a good handle on all the choices they recommended.

Got it, makes sense.

BlueBike2011 wrote:6. I have multiple 403B accounts due to use of different advisors over 30 years plus change in the choices available from employer. As a whole, 403B accounts are ~33-34% of my total portfolio.

This is why I wrote above about fund vs account. I think you mean you have a lot of funds but not necessarily a lot of accounts. I don't see how you can trim the number of your accounts any more than what you already have except possibly the SEP IRA. What we can probably do is reduce and consolidate the number of funds you have within your accounts. This will make your overall account easier to manage and keep in balance.

Also, I think you're listing the funds that you currently own. Can you list all the available funds (and expense ratios) that are in the plan, so we know what you have to work with? There must be others. I'm looking in particular for a bond fund as you'll need to hold some of your 40% of bonds in this plan.

BlueBike2011 wrote:7. yes, the stock account has done well and is diversified. I had an advisor suggest the purchases and paid a transaction fee for each trade. I mostly bought and held with little turnover. I pulled the account and moved to Vanguard when the advising company implemented substantial fee as percentage of holding regardless of trading. It has just been sitting for last year as I decide what to do with it. Know now I can whittle at it by selling off any losses to balance gains.

After getting a little more clarification on the funds that are available to you in the 403(b), I can try to come up with a Boglehead-style portfolio with you. This portfolio will need to classify your individual stocks (25% of portfolio) within your desired asset allocation of 60% stocks and 40% bonds.

If you polled this forum on what to do with your 38 individual stocks, you'll get a range of answers. I don't know how to advise you on this so I'll just try to put together a portfolio with the stocks in it.

If your portfolio is 60% stocks, and 25% of your portfolio is in individual stocks, then that leaves 35% for other stock funds. Not knowing more about your specific stocks, I'm going to guess they're predominantly US large-cap, blue-chip types (tell me if I'm wrong), so I'd probably recommend something like:

If your individual stocks are predominately large-cap US blue-chips, then you can make a case that this basket of stocks is like your own personalized do-it-yourself large-cap index fund, and this would suggest holding a complementary small-cap US stock index fund to give your portfolio more small-cap exposure. Therefore, you might consider:

Hoppy08520- thank you for your careful look at my portfolio and suggestions. I think next step for me it to explore with benefits office on the moving of some of the funds in my 403B account to simplify-- i.e. find out what is allowed and what is not. Headed out of town for series of work-related obligations for several weeks so don't perceive my lack of quick response with disinterest. I will get on this and appreciate your help.